young people and savings

8/3/2019 YOUNG PEOPLE AND SAVINGS

1/28

Institute for Public Policy Research

Laura Bradley

February 2012

IPPR 2012

BRIEFING

YOUNG PEOPLEAND SAVINGS

POLLING

RESULTS


2/28

ABOUT THE AUTHORS

Laura Bradley is a researcher at IPPR.

ACKNOWLEDGMENTS

The author wishes to thank Friends Provident

Foundation for kindly funding this work, andAndrew Thompson at Friends Provident

Foundation and Tony Dolphin at IPPR for

comments on an earlier draft.

ABOUT IPPR

IPPR, the Institute for Public Policy Research, is the

UKs leading progressive thinktank. We produce

rigorous research and innovative policy ideas for a fair,

democratic and sustainable world.

We are open and independent in how we work, and

with ofces in London and the North of England, IPPR

spans a full range of local and national policy debates.

Our international partnerships extend IPPRs inuence

and reputation across the world.

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Registered charity no. 800065

This paper was rst published in February 2012. 2012

The contents and opinions expressed in this paper are

those of the author(s) only.

IDEAStoCHANGE LIVES


3/28

IPPR |Young people and savings: Polling results1

Introduction..................................................................................................................2

1.Financialsecurity.....................................................................................................3

Control.......... ........... .......... .......... ........... .......... ........... .......... .......... ........... .......... .....4

2.Future.......................................................................................................................6

Parents......................................................................................................................6

Homeownership.......................................................................................................6

Career.......... ........... .......... .......... ........... .......... ........... .......... .......... ........... .......... .....7

Financialworries........... .......... ........... .......... .......... ........... .......... ........... .......... .......... 8

3.Savingsanddebt...................................................................................................11

Savings....................................................................................................................11

Debt.........................................................................................................................14

4.Resilience...............................................................................................................16

5.Attitudestosaving.................................................................................................18

6.Pensions.......... .......... .......... ........... .......... ........... .......... .......... ........... .......... .......... 22

7.Savingsadviceandinfuence........... .......... .......... ........... .......... .......... ........... ........ 24

Concludingthoughts.......... ........... .......... .......... ........... .......... ........... .......... .......... .....26

CONTENTS


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ThefnancialutureoyoungpeopleintheUKisanissuethatrequiresurgentattention.

WithyouthunemploymentatrecordlevelsooveronemillioninNovember2011,1

theprospectsoryoungpeoplehavereachedanewlow.Homeownershipisgetting

increasinglyoutoreachoryoungfrsttimebuyers,withlargedepositsbeingapre-

requisiteorgettingmortgages.ThescrappingotheEducationalMaintenanceAllowance

(EMA)andsteepincreasesintuitioneesmeanthatyoungpeopleaceanincreasing

fnancialchallengeitheywishtopursuetheireducation.Thisresearchaimstocapturethe

moodoyoungpeopleinsuchachallengingeconomicenvironment.

ThisbriefngpresentsfndingsromanonlinepollconductedbyYouGovwith1,504youngpeopleaged16to29.Alltherespondentshadincomesbelowthemedianincomeo

21,000orthisgroup.

Thepollingwasconductedaspartoawiderprojectlookingathowtogetyoungpeople,

particularlythoseonlowincomes,tosavemore.Thisprojectisdesignedtobuildgreater

understandingothesavingbehaviourandattitudesoyoungpeoplelivingintheUK.It

willalsoinvolvethreeworkshopswithyoungpeopleandinterviewswithkeystakeholders.

Theultimateaimistomakeachievablerecommendationsonhowyoungpeople,

particularlythoseonlowincomes,canbeencouragedtosavemoreorthelongerterm.2

Thepollingreportedherealsoprovidesanopportunitytoexaminetheattitudesyoung

peoplehavetowardstheiruture,lookingattheirexpectationswithregardstostandards

oliving,homeownershipandcareers.Comparisonswithpreviouspollsandresearchshowhowtheattitudesandbehaviouroyoungpeoplehavebeenimpactedbythe

fnancialcrisisandthenewfnanciallandscapetheyareacing,andallowustoexplore

otherlonger-termtrends.

1 Seehttp://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/january-2012/index.html

2 Formore,seehttp://www.ippr.org/research-project/44/8008/young-people-and-savings

INTRODUCTION
http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/january-2012/index.htmlhttp://www.ippr.org/research-project/44/8008/young-people-and-savingshttp://www.ippr.org/research-project/44/8008/young-people-and-savingshttp://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/january-2012/index.html


5/28


Mostyoungpeopledonoteelfnanciallysecure:47percenteithertendedtodisagree

orstronglydisagreedwiththestatementIeelfnanciallysecure,comparedwith

29percentwhotendedtoagreeorstronglyagreed.

23%

23%

30%

17%

6%2%

Strongly agree Tend to agree Neither agree nor disagree

Tend to disagree Strongly disagree Dont know

Theyoungerpeoplewere,themorelikelytheyweretoagreewiththestatementIeelfnanciallysecure:38percento1617yearoldstendedtoagreeorstronglyagreedwith

thestatement,comparedto31percento18to21yearoldsand24percento22to29

yearolds.Thoseinthe1617grouparemorelikelytobelivingwiththeirparentsandsohave

limitedlevelsofnancialresponsibility,whichnodoubtaectstheireelingsandresponse.

(Thiswillalsohaveaectedtheirresponsestootherquestionsthroughoutthisbriefng,itis

indicatedwherevertheiranswersaremateriallydierentromthoseotheolderagegroups.)

Incomedidnotaecttheextenttowhichpeopleeltfnanciallysecurebutemployment

statusdid:42percentounemployedyoungpeoplestronglydisagreedwiththe

statementIeelfnanciallysecure,comparedwith16percentoull-timeworkers.

0%

40%

80%

20%

60%

100%

Work

ingfull-t

ime

Worki

ngpart-tim

e

ALLW

ORKE

RS(NET

)

Fu

ll-tim

estud

ent

Unem

ploye

d

Notwork

ing/Othe

r



1. FINANCIALSECURITY

Figure1.1

Agreementwiththe

statementIeel

fnanciallysecure

Figure1.2

AgreementwiththestatementIeel

fnanciallysecure,by

employmentstatus

Ieel

nancially

secure

Ieelnancially

secure


6/28


ControlRoughlythesameproportionoyoungpeopleeelthattheyhavecontroloverboththeir

fnancesandtheirlives,with59percenttendingtoagreeorstronglyagreewiththe

statementsIhavecontrolovermyfnancesandIhavecontrolovermylie.18percent

and17percentrespectivelyeitherdisagreedorstronglydisagreedwiththesestatements.

14%

45%

21%

14%

2%4%



12%

47%

21%

13%

2%4%



Obviousdierencesbetweenemployedandunemployedyoungpeopleexistedinthe

resultsorthesequestions,with58percentoemployedyoungpeopleagreeingthatthey

hadcontrolovertheirfnancescomparedwith34percentounemployedyoungpeople.

ThedierencewaslargerorthestatementIhavecontrolovermylieat58percent

and23percentrespectivelyhighlightingtheactthatunemploymentcanhavear-

reachingeectsbeyondfnancialinsecurity.

Thereisalsoanegativerelationshipbetweenageandthelikelihoodoeelingincontrolo

oneslie(seefgure1.5below).

TheseresultscanbecontrastedwithastudyundertakenbytheChildrensMutualin

20093whichassessedthedegreetowhichyoungpeopleaged18to25eltfnancially

independent,andwhichexploredarangeootherareasrelatedtothefnancialutureoyoungpeople.Youngpeoplewereaskedtoratethemselvesaccordingtohowfnancially

independenttheythoughttheywere,usingafve-pointscale.Thelargestproportiono

3 Seehttp://www.thechildrensmutual.co.uk/PDF/Young_people_and_fnancial_independence.pd

Figure1.3

Agreementwiththe

statementIhavecontrol

overmyfnances

Figure1.4

Agreementwiththe


overmylie

Ihave

control

overmy

nances

Ihave

controlover

mylie
http://www.thechildrensmutual.co.uk/PDF/Young_people_and_financial_independence.pdfhttp://www.thechildrensmutual.co.uk/PDF/Young_people_and_financial_independence.pdf


7/28


youngpeoplelocatedthemselvesontheindependentsideothescale,with47percent

omenand52percentoemaleschoosingtheindependentoption.

0%

20%

50%

40%

10%

30%

60%

Strongly

agree

Tend

toagree

Neith

eragree

nor

disa

gree

Tend

toagree

Strongly

disa

gree

Dontk

now

1617 1821 2229

Figure1.5

Agreementwiththe


overmyfnances,by

agegroup


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Thissectionpresentsindingsontheattitudesandexpectationsoyoungpeoplelooking

orward,speciicallyhowtheycomparetheirownprospectstotheirparentsatthesame

ageandabouttheirexpectationsconcerninghomeownershipandutureemployment.

ParentsOnlyaminorityorespondentseltthattheywouldbebetterothantheirparents:

28percenteltthattheirfnancialprospectswerealittlebetteroralotbetterthantheir

parentswereatthesameage,while44percentsaidtheywereworsetosomedegree.

Responses

Alotbetter 12%

Alittlebetter 16%

Nobetterbutnoworse 19%

Alittlebitworse 22%

Alotworse 22%

Dontknow 9%

Onthisissue,optimismwasparticularlylowortheoldergroupoyoungpeople,with

only21percento2229yearoldseelingthattheirprospectswerealotoralittle

betterthantheirparents.Thisperhapsreectstheincreasingpressureonthisgroup,

whoarelesslikelytobelivingathomeortobestudentsandmorelikelytohavefnancial

responsibilities.

Thereisasensethatthispessimismissomethingnew,ratherthanageneraltendency

orpeopleattheagewhentheyarejustsettingupinliealwaystobeabitgloomy

becauseothepressurestheyace.Thisintergenerationalinequityhasbeenpickedupby

politicians,mostnotablybyDavidWillettsinhisbook,The Pinch.EdMiliband,duringhis

2011partyconerencespeech,saidthatorthefrsttimeyoungergenerationsdidnoteel

positiveabouttheirutureandelttheywoulddoworsethantheirparents. 4Acombination

oactorsislikelytobecontributingtothisgloom:therecessionandyouthunemployment

maybethemainreasons,whichwouldsuggestthattheremightbesomechangeo

opinionshouldtheeconomicsituationimprove.Butotherlong-termactorscouldalso

contributetothispessimisticview:changestotheuniversitysystem,orexample,mayhavealastingimpactontheattitudesoyoungpeoplelivingintheUK.

HomeownershipAmajorityorespondentselttheywouldowntheirownhousesintheuture,with

62percentagreeingorstronglyagreeingwiththestatementIwillownmyownhousein

theuture.

Theemploymentstatusorespondentsaectedtheireelingsabouthomeownership.

Unemployedrespondentsweremoreuncertainaboutwhethertheywouldowntheirown

home,with17percentsayingtheydidntknowwhethertheyagreedwiththestatement

and23percentneitheragreeingnordisagreeing.

4 Forbackgroundtothisspeechseehttp://resh-ideas.org.uk/uploads/35ea239-daed-1dc4-3d41-

bd5d04ce675e.pd

2. FUTURE

Table2.1Howdoyoueelyour

uturefnancialprospects

arecomparedtothoseo

yourparent(s)whenthey

wereyourage?
http://fresh-ideas.org.uk/uploads/f35ea239-daed-1dc4-3d41-bd5d04ce675e.pdfhttp://fresh-ideas.org.uk/uploads/f35ea239-daed-1dc4-3d41-bd5d04ce675e.pdfhttp://fresh-ideas.org.uk/uploads/f35ea239-daed-1dc4-3d41-bd5d04ce675e.pdfhttp://fresh-ideas.org.uk/uploads/f35ea239-daed-1dc4-3d41-bd5d04ce675e.pdf


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27%

35%

16%

9%

8%

6%



0%

40%

80%

20%

60%

100%

Worki

ngfull-time

Worki

ngpart-time

ALLW

ORKE

RS(NET)

Full-t

imes

tudent

Unem

ployed

Notw

orking

/Other



Thisshowsthatdespitetheincreasingdifcultyyoungpeopleaceinpurchasingahome,

eventhemajorityothoseonlowincomesstillexpecttobeabletodoso.Thissuggests

thathomeownershipremainsanimportantaspectoBritishculture.The2009Childrens

Mutualsurveyshowedthatoverhaloyoungpeopleeltthatbuyingahomeisa

requirementorfnancialsecurity,whichseemstounderlinetheimportanceplacedon

homeownershipamongyoungpeople.

TheRBSMoneySensePanelReport(2010) 5fndsthatthisisalsotrueoBritish

teenagers.Itoundthatoverhalo1219yearoldsexpecttobuyahousebythetime

theyare25yearsoldand82percentbythetimetheyare30.Asthisiswellabovethe

currentUKhome-ownershiprate,thereissomethingoaparadoxhere:youngpeople

thinktheyaregenerallylesswell-placedfnanciallythantheirparentsbutarealmost

certainlyoverlyoptimisticabouttheirchancesoowningahome.

CareerMostrespondentswereoptimisticabouttheiruturecareer,with56percentagreeing

withthestatementIwillhavealong-termcareer.Only16percentdisagreedorstrongly

disagreedwiththestatement.

5 Seehttp://www.rbs.com/microsites/MoneysenseResearchPanel/download/MoneySense_Panel_Report.pd

Figure2.1

Agreementwiththe

statementIwillownmy

ownhouseintheuture

Figure2.2

Agreementwiththe

statementIwillownmy

ownhouseintheuture,

byemploymentstatus

Iwillown

myown

housein

theuture

Iwillown

myown

housein

theuture
http://www.rbs.com/microsites/MoneysenseResearchPanel/download/MoneySense_Panel_Report.pdfhttp://www.rbs.com/microsites/MoneysenseResearchPanel/download/MoneySense_Panel_Report.pdf


10/28


19%

37%

20%

11%

8%

5%



Again,employmentstatusaectedtheresults.Unemployedrespondentsweretheleast

positive,with32percentagreeingorstronglyagreeingwiththestatement.Thiscanbe

contrastedwith46percentopart-timeworkers,52percentothoseinull-time

employmentand70percentoull-timestudents.

0%

40%

80%

20%

60%

100%

Working

full-t

ime

Working

part-tim

e

ALLW

ORKE

RS(NET

)

Full-t

imestud

ent

Unem

ployed



FinancialworriesManyrespondentswereworriedabouttheirfnancialutureandabilitytomeettheir

obligations:41percentorespondentstendedtoagreeorstronglyagreewiththe

statementIotenworryaboutmymonthlycosts,comparedwith34percentwho

disagreedorstronglydisagreed(seefgure2.5below).

Again,theresultscorrelatewithemploymentstatus.Unemployedpeopleworriedthe

most,with60percentagreeingorstronglyagreeingwiththestatement,comparedwith

45percentothoseinull-timeemploymentand33percentostudents.

Themajorityorespondentseltthattheywouldworryaboutmoneyregardlessothe

eorttheymade,with59percentoallrespondentstendingtoagreeorstronglyagree

withthestatementEveniIworkhardIwillalwaysworryaboutmoney,comparedwith

20percentwhodisagreedorstronglydisagreed.

Figure2.3

Agreementwiththe

statementIwillhavea

long-termcareer

Figure2.4

Agreementwiththe

statementIwillhavea

long-termcareer,by

employmentstatus

Iwillhave

along-term

career

Iwillhave

along-term

career


11/28


12%

29%

20%

26%

3%8%



14%

45%

18%

17%

3%3%



Thisresponseisaectedbyemploymentstatusbutnottothesamedegreeasother

questionsabouttheuture.Oull-timeworkers,62percentagreedorstronglyagreed

withthestatement,comparedto67percentopart-timeworkers,66percento

unemployedrespondentsand52percentostudents.

Halotherespondentswereworriedabouttheirutureemployment,with50percent

tendingtoagreeorstronglyagreewiththestatementMyemploymentprospectsworryme,comparedwith27percentwhodisagreedorstronglydisagreed(seeigure2.7

below).Whencontrastedwiththeindingthatmostyoungpeopleareoptimisticabout

theirlonger-termcareers,thissuggeststhatyoungerpeople,althoughworriednow,

eelthatthingswillgetbetter.Thismaybebecauseyoungerpeopleviewtherecession

andthechallengesassociatedwithstartingacareerasshorter-termbarrierstobe

overcome.

Unsurprisingly,unemployedrespondentsweremoreworriedabouttheiremployment

prospectsthanemployedrespondents,with73percentothatgroupagreeingorstrongly

agreeingwiththestatement,comparedwith50percentoallworkers.Theresultsalso

showthatpart-timeemployeesaremoreworriedabouttheiremploymentprospectsthan

ull-timeworkers,with58percentoparttimeworkersagreeingorstronglyagreeingwith

thestatement,comparedto48percentoull-timeworkers.Thissuggeststhatpart-time

workisviewedasbeinglesssecurethanull-timework.

Figure2.5

Agreementwiththe

statementIotenworry

aboutmyabilitytomeet

mymonthlycosts

Figure2.6

Agreementwiththe

statementEveniIwork

hard,Iwillalwaysworry

aboutmoney

Iotenworry

aboutmyability

tomeetmy

monthlycosts

EveniI

workhard

Iwillalways

worryabout

money


12/28


18%

32%

19%

21%

3%6%



Figure2.7

Agreementwith

thestatementMy

employmentprospects

worryme

Myemployment

prospects

worryme


13/28


Thissectionprovidesanalysisorespondentscurrentfnancialsituation,specifcally

assessingtheamountosavingsanddebtheldbyyoungpeople.

SavingsNearlyaquarteroallrespondentsdidnothaveanysavingsandanadditional10percent

hadlessthan100intotal:overall,athirdoallrespondentshadlessthan100in

savings.Only29percenthad3,000ormoreandoneinfvewithover5,000.

Thishighlightsthelowlevelosavingsheldbyyoungpeople.Financialadvisersgenerally

recommendholdingaminimumothreemonthsworthodisposableincomeinsavingsincaseofnancialemergencies.Thevastmajorityoyoungpeopleonlowincomeshavenot

achievedthisthreshold.

0%

5%

20%

15%

10%

25%

Idontha

veany

savin

gs

Less

than

10

0

100

49

9

500

99

9

Dontk

now

Moreth

an20

,000

10,00

019

,999

5,000

9,99

9

4,000

4,99

9

3,000

3,99

9

2,000

2,99

9

1,000

1,99

9

Prefer

not

tosay

Levelosavingswasnotcorrelatedtoincometoanysignifcantdegree.Therewere

dierencesoundbetweendierentages:30percento2229yearoldsreportedhaving

nosavings,comparedto19percento1821yearoldsandonly13percento1617

yearolds.Thissuggeststhegroupleastlikelytobefnanciallyindependentandreceiving

theirownincomeismorelikelytohavetheirownsavings.

Employmentstatusalsoinuencedtheamountosavings:only27percentoull-

timeworkershadnosavings,comparedwith45percentounemployedrespondents.

Interestingly,only18percentoull-timestudentssaidthattheydidnothavingany

savings,althoughthisislikelytobepartiallydowntodierencesinage,withmanyo

thoseinthiscategorylikelytobestilllivingathomewiththeirparents.

Thereweresomesmalldierencesbetweenyoungmenandwomen,withwomenhaving

lowersavingsthanmen.

YoungpeoplelivingintheNorthandtheMidlandsweremorelikelytorespondthattheydidnothaveanysavings.Forexample,29percentorespondentsromtheNorth

reportedhavingnosavingscomparedwith19percentothoselivinginLondonand

20percentothoselivingintheSouth.

3. SAVINGSANDDEBT

Figure3.1

Levelocurrentsavings


14/28


Worki

ngfull-t

ime

Worki

ngpart-tim

e

ALLW

ORKE

RS(NET

)

Full-t

imes

tudent

Unem

ploye

d

Notw

orking

/Othe

r0%

40%

80%

20%

60%

100%

90%

70%

50%

30%

10%

I dont have any savings Less than 100 100499 500999

Dont know

More than 20,00010,00019,9995,0009,999

4,0004,9993,0003,9992,0002,9991,0001,999

Prefer not to say

0%

5%

20%

15%

10%

25%

Idontha

veanys

aving

s

Less

than

10

0

100

49

9

500

99

9

Dontk

now

Moretha

n2

0,00

0

10,00

019

,999

5,000

9,99

9

4,000

4,99

9

3,000

3,99

9

2,000

2,99

9

1,000

1,99

9

Prefer

not

tosay

Male Female

North

0% 90%80%70%60%50%40%30%20%10% 100%

East

Scotland

Wales

South

Midlands

London

NorthernIreland

I dont have any savings Less than 100 100499 500999

Dont know

More than 20,00010,00019,9995,0009,999

4,0004,9993,0003,9992,0002,9991,0001,999

Prefer not to say

Figure3.2

Levelocurrentsavings,

byemploymentstatus

Figure3.3


bygender

Figure3.4


byregion


15/28


Despitehavinglowlevelsosavings,manyyoungrespondentseltthattheyhadsavedor

unexpectedfnancialdemands.Overhalotherespondentsagreedorstronglyagreed

withthestatementIalwaysmakesureIhavemoneysavedorarainyday.

0%

20%

40%

10%

30%

50%

Strongly

agree

Tend

toagree

Neith

eragree

nor

disa

gree

Tend

toagree

Strongly

disa

gree

Dontk

now

Thisisanapparentlycontradictoryresult,andsuggeststhatyoungpeopleareunawareo

howmuchmoneytheywouldneedi,orexample,theylosttheirjob.Thisgapbetween

perceptionandrealitywasalsooundintheFSAsfnancialcapabilitysurvey(2006),which

showedthat75percentorespondentsreportedthattheyensuredtheyhadsavingsora

rainydaywhilenearlyhalorespondentsdidnotinacthaveanysavings.Italsooundthatthiswasworseoryoungergroupsopeople.Thispointstoalackounderstanding

amongyoungpeopleabouttheamountofnancerequiredortheirutureandsuggests

thatfnancialeducationcouldbeanimportantaspectoanyattempttoinuencethe

savingsbehaviouroyoungpeople.

Dierencesbetweengroupsoyoungpeoplewereidentifedwithintheresults.In

particular,unemployedyoungpeoplewerelesslikely(38percent)tosaythattheysaved

orarainyday,comparedwithoverhal(53percent)oworkers.Again,therewere

nosignifcantdierencesbetweenyoungpeopleondierentincomes,suggestingthat

incomepersedoesnotplayastrongroleinshapingsavingsbehaviour.

Alackounderstandingastowhatsavingsareneededisalsoreectedinthefndings

onexpectedsavingsrequiredortheuture.Respondentswereaskedtoestimatehowmuchsavingstheywouldneedattheageo30,assumingtheyneededtosaveor

theirpension,adepositonahomeanduturesocialcarecosts(seefgure3.6below).

Worryingly,themostcommonanswerwasdontknow,with34percentorespondents

selectingthisoption.

Mostothosewhodidsuggestanappropriateamounttendedtounderestimatetheirlikely

needs.Theaveragepropertyboughtbyafrst-timebuyerisaround120,000,according

totheHaliaxhousepriceindex,6sowithlendersnowrequiringa20percentdeposit,

around25,000isneededtobuyahouse,beorepensionandothersavingsaretaken

intoaccount.

6 Seehttp://www.lloydsbankinggroup.com/media1/economic_insight/haliax_house_price_index_page.asp

Figure3.5Agreementwiththe

statementIalways

makesureIhavemoney

savedorarainyday
http://www.lloydsbankinggroup.com/media1/economic_insight/halifax_house_price_index_page.asphttp://www.lloydsbankinggroup.com/media1/economic_insight/halifax_house_price_index_page.asp


16/28


15%

15%

13%

1%3%

15%

34%

4%

Less than 4,999 5,000 to 14,999 15,000 to 24,999

25,000 to 34,999 35,000 to 39,999 40,000 to 44,999

45,000 to 49,999 50,000 or more Don't know

DebtNearlyathirdoyoungpeople(30percent)donothaveanydebt,butthesame

proportionhavedebtsoover10,000.Onein10youngpeoplehasdebtsobetween

1,000and10,000.

0%

10%

5%

25%

20%

15%

30%

Idonthave

anyd

ebt

Lessth

an100

1004

99

50

09

99

Dontkn

ow

Moretha

n2

0,000

10,00

019

,999

5,00

09

,999

4,00

04

,999

3,00

03

,999

2,00

02

,999

1,00

01

,999

Prefer

nott

osay

Understandably,thisisgreatlyaectedbyagegroup.Orespondentsaged1617,

85percentdidnothaveanydebts,whereasonly26percentothe1821groupand

19percentothe2229groupweredebtree.Thisreectstheincreasinglikelihoodo

youngerpeoplerequiringdebtastheyleavehome,gothroughuniversity,andmakelarge

purchases.

Theresultsdonotshowsignifcantdierencesinrelationtoemploymentstatusbut,

interestingly,theamountodebtheldisrelatedtoincomelevelsoyoungpeople.Higher

earnersweremorelikelytohavedebt,with43percentothoseearningbelow4,000ayearreportingthattheydidnothavedebts(thiswillmainlybetheyoungeragegroup),

comparedwith18percentothoseearning13,50120,500.

Thisislikelytobeaectedbythelikelihoodthatlowerearnersareintheyoungergroups

andthathigherearnershavegreatereligibilityorreceivingcredit.

Figure3.6

Levelosavingsrequired

atage30

Figure3.7

Levelodebtheldby

youngpeople


17/28


0% 20% 40% 60% 80% 100%

I dont have any debt

Less than 99

100499

500999

1,0001,999

2,0002,999

3,0003,999

4,0004,999

5,0009,99910,00019,999

More than 20,000

Don't know

Prefer not to say

Under 4,000 per year 4,0007,000 per year

7,00113,500 per year 13,50120,500 per year

Levelsodebtheldwerealsoaectedbythenumberochildrenrespondentshad.Othe

youngpeoplewithoutchildren,19percentdidnothaveanydebtbystarkcontrast,

44percentothosewithonechild,67percentothosewithtwochildrenand

52percentothosewiththreechildrenweredebtree.Thissuggeststhathavingchildren

mayresultinmorecautiousfnancialbehaviourthoughitisalsopossibleinsomecases

thathavingdebtactsasaconstraintonstartingaamily.

Figure3.8

Levelodebtheldby

youngpeople,byincome


18/28


Respondentswereaskedabouthowtheywouldmakeendsmeetitheybecame

suddenlyunemployed. 7Anumberosuggestedoptionsweregiven,aswellasthe

opportunitytoselectotherandnominateanindividualresponse.Respondentswere

allowedtoselectmorethanoneanswer.

Response

Cutbackonspending 63%

Drawmoneyromsavingsaccount 40%

Borrowmoneyromamily/riends 33%

Claimsocialsecuritybenefts 33%

Askamily/riendstogivemoneytohelpout

Usecreditcardoroverdrat 20%

Makearrangemen twithcreditorstopay less/suspendpayments 8%

Dontknow 7%

Sellinvestments 7%

Employerwouldpaysickpay 5%

Wouldntmakeendsmeet;wouldallbehindwithbillsorothercommitments 5%

Takeoutaloan(includingsocialundloan,payday,doorstep,bankloanetc) 5%Othernominatedresponses 3%

Claimoninsurancepolicy 2%

Bor rowagain sthome/re-mortgage/in creasemortgageonhome 2%

Youngpeopleclaimtheywouldbemorelikelytorelyonmoneytheyhavealreadysaved

andareductionintheiroutgoingstocope.Onlyoneinfvesaystheywoulduseacredit

cardoroverdrat,only5percentsaidtheywouldtakeoutaloan,andonly2percent

wouldborrowagainstahomeinordertomakeendsmeet.Thisseemstoindicatea

preerenceormorefnanciallybenefcialapproachestocopingwithalossoincome,with

manysayingtheywouldopttoavoidthecostlyinterestaccruedondebt.However,their

abilitytorelyontheirownsavingsisquestionablewhenconsideringthatonlyoneinfve

hassavingsoover5,000.

ThisconcurswithapreviousstudyundertakenbytheFinancialServicesAuthority(FSA)

ofnancialcapabilityin2006.8Itoundthat84percentorespondents(notjustyoung

people)stronglyagreedortendedtoagreethattheywouldrathercutbackonspending

thanaccumulatedebtonacreditcard.

Surprisingly,onlyathirdorespondentsinoursurveysaidtheywouldclaimsocialsecurity

benefts,suggestingthattheyeltoptimisticthattheywouldbeunemployedoronlya

shortperiodotimeorthattheywouldpreertorelyonothersourcesoincome.However,

thisresponsewasmorepopularamongtheoldergroup,with40percentothoseaged

2229reportingthattheywouldclaimbenefts.

Overaquarterorespondentssaidtheywouldrelyonhelpromriendsandamilyinthecaseounemployment.In2008,theChildrensMutualundertookasurveyoyoung

7 Respondentswhowerecurrentlynotinworkwereaskedaboutwhattheyhadbeendoingtomakeendsmeet.

8 Seehttp://www.sa.gov.uk/pubs/other/fncap_baseline.pd

4. RESILIENCE

Table4.1

Makingendsmeetinthe

eventounemployment
http://www.fsa.gov.uk/pubs/other/fincap_baseline.pdfhttp://www.fsa.gov.uk/pubs/other/fincap_baseline.pdf


19/28


peopleaged1825andtheirparentswhichaskedsomerelevantquestionsinthisarea. 9

Itoundthatover60percentotheyoungpeopleagreedwiththestatementIthinkmy

parentsshouldsupportmewhenIturn18comparedwith15percentwhodisagreed.

Thesamesurveyshowedthatover50percentoparentsalsoeltthattheyshould

continuetosupporttheirchildrenatertheyturn18.Thissuggestspersonalrelationshipsareanimportantsourceosupportormanyyoungpeopleandthatthisisanexpectation

obothyoungpeopleandtheirparents.

Inoursurvey,resultsdidnotvarymarkedlybetweenincomegroups,suggestingincome

isnotaactorindeterminingresponsestounemployment.Otherresponsesnominated

includedsellingpossessions,relyingonapartnersincomeandmovingbackintothe

amilyhome.

Respondentswerealsoaskedhowlongtheythoughttheycouldmakeendsmeetshould

theybecomeunexpectedlyunemployed.Theresultsshowedthat44percentoyoung

peopleelttheywouldlastlessthanthreemonthsaterwhichtheywouldbeunableto

makeendsmeet.

Twelve months or more Dont know

More than one week but less than one month

More than three months but less than six months

More than one month but less than three months

11%

13%

19%

27%

3%

13%

Less than one week

More than six months but less than twelve months

14%

9 Seehttp://www.sirc.org/publik/trust_und_generation.pd

Figure4.1

Makingendsmeetinthe

eventounemployment,

bytime
http://www.sirc.org/publik/trust_fund_generation.pdfhttp://www.sirc.org/publik/trust_fund_generation.pdf


20/28


Generalattitudestowardssavingweremixed.Whenaskedtowhatextenttheyagreed

withthestatementItendtoliveortodayandleavetomorrowtotakecareoitsel,

34percentorespondentsagreedorstronglyagreed,comparedwith47percentwho

disagreedorstronglydisagreed,showinganoveralltendencytothinkabouttheuture.



1% 6%

28%

18%

31%

16%

Havingchildrenhadlittleeectonwhetherrespondentsagreedordisagreed:43percent

othosewithchildrendisagreedorstronglydisagreedwiththestatementcomparedwith

49percentothosewithoutchildren.Asinthediscussionodebtlevelsabove,thiscould

reectthegreaterlevelsoresponsibilityeltbyparents,whoeeltheyneedtoprovide

securityortheirchildren,thoughthegapbetweenresponseratesissmall.

Thevastmajorityorespondents(86percent)wanttosaveorthelongerterm.



1% 1%

38%

48%

9%

2%

Theproportionorespondentswhoreportedhavingmoneyletoverattheendothe

weekaterallexpenseshadbeenpaidoutwassplitairlyevenlybetweenthosethatdoall

othetime,mostothetime,sometimesandrarely,butwithonein10sayingthisnever

happened.

5. ATTITUDESTOSAVING

Figure5.1

Agreementwiththe

statementItendto

liveortodayandleave

tomorrowtotakecare

oitsel

Figure5.2

Agreementwiththe

statementIwouldliketo

saveorthelongerterm

Itendtolive

ortodayand

leavetomorrow

totakecareoitsel

Iwouldlike

tosaveorthe

longerterm


21/28


All of the time Most of the time Sometimes

Rarely Never Dont know

23%

18%

22%19%

10%

8%

Menwereslightlymorelikelythanwomentohavemoneyletoverattheendotheweek.

Allo

fthe

time

Mosto

fthe

time

Sometim

es

Rarely

Never

Dontk

now

Male Female

0%

5%

10%

15%

20%

25%

Incomedidnotshowanycleareectonthisbutemploymentstatusdid,withonly

19percentounemployedrespondentssayingtheyhadmoneyletoverallorsomeo

thetime,comparedwith41percentoallworkersand45percentoull-timestudents.

Mostyoungpeopleworryabouttheirmonthlycosts(seefgure5.5below).Onthispoint,

morewomenthanmenreportedworrying,with46percentstronglyagreeingortendingto

agree,comparedto38percentomen.

Amajorityorespondents(57percent)eltthattheywerelesslikelytosaveasaresulto

thefnancialcrisisothepastthreeyears.Thiswasmostlybecausetheyhavelessmoney

tosaveorbecauseinterestratesaresolow,butonein10alsoeltthatitwasbecause

theyhadreducedtrustinfnancialinstitutions.Agreaterproportionounemployedyoungpeople(84percent)eltthattheywerelesslikelytosaveasaresultothefnancialcrisis

unsurprisingly,themostsignifcantreasongivenorthiswasalackoresources,with

46percentsayingitwasbecausetheywerelesswell-o.Itislikelythatmanyothe

Figure5.3

Responsestothe

questionHowotendo

youhavemoneyletover

attheendotheweek

aterallexpensesarepaid?

Figure5.4

Responsestothe

questionHowotendo

youhavemoneyletover

attheendotheweek

aterallexpensesare

paid,bygender


22/28


unemployedrespondentsmayhavelosttheirjobsasaresultothefnancialcrisis,which

perhapsexplainsthehigherresponserate.

20%

12%

29%26%

8%

3%



Eectonsaving

Noeectthecris ishasnotchangedmyattitudetowardssaving 29%

IamlesslikelytosavebecauseIamlesswell-o 26%

Iammorel ik elytosavebecausetheou tlook ismoreun certain 24%

Iamlesslikelytosavebecauseinterestratesaresolow 20%

Iamlesslikelytosavebecausemytrustinfnancialinstitutionshasdiminished 11%Dontknow 5%

Other 1%

Arangeoreasonsweregivenornotsaving,withlackoaordabilityandhighoutgoings

beingthemainones(seefgure5.6below).Onein10respondentseltthattheydid

notwanttheirmoneytiedupindierentaccountsincasetheyneededtouseit,anda

urther14percenteltthattherewerenotenoughincentivestosave.Thissuggeststhat

althoughalackomoneyisthemainreason(becauseoeitherreducedincomelevelsor

increasedcostsoliving),thewaysavingsaccountsaredesignedcouldalsobeaactorin

encouragingyoungerpeopletosave.10

Onthisissue,responseswererelatedtoagegroup,with39percento1617yearoldsblamingalackoaordability,comparedwith58percento1821yearoldsand

70percento2229yearolds.Theyoungestgroupwasinsteadslightlymorelikely

toreportthattheydidnotunderstandfnancialproductsorthatthequestionwasnot

applicabletothem.Thismaybearesultothelikelihoodthattheyoungergrouphaveno

incomeromemploymentandsoeelthatthisislessoaactorintheirdecisionsabout

saving.

TheseresultsbroadlymatchthoseoundbyNationalSavings&Investments(NS&I)when

itusedtoaskasimilarquestioninitssavingssurveys.Thelasttimeitaskedsucha

questioninthesummero2009itoundthatjustoverhaloallrespondents(allage

groups)saidthemainthingstoppingthemromsavingmorewasIcantaordtosave;

myoutgoingspreventmeromsaving. 11

10 FormoreinormationondesigningsavingsaccountsseeDolphinT(2010)Designing a life course savings account:

How to help low to middle income families save more,London:IPPR.http://www.ippr.org/publications/55/1839/

designing-a-lie-course-savings-account-how-to-help-low-to-middle-income-amilies-save-more

11 Seehttp://www.nsandi.com/fles/asset/pd/savings_survey_summer09.pd

Figure5.5

Agreementwiththe

statementIotenworry

aboutmyabilitytomeet

mymonthlycosts

Table5.1

Eectsothefnancial

crisisonsavings

behaviour

Iotenworry

aboutmyabilitytomeetmy

monthlycosts
http://www.ippr.org/publications/55/1839/designing-a-life-course-savings-account-how-to-help-low-to-middle-income-families-save-morehttp://www.ippr.org/publications/55/1839/designing-a-life-course-savings-account-how-to-help-low-to-middle-income-families-save-morehttp://www.nsandi.com/files/asset/pdf/savings_survey_summer09.pdfhttp://www.nsandi.com/files/asset/pdf/savings_survey_summer09.pdfhttp://www.ippr.org/publications/55/1839/designing-a-life-course-savings-account-how-to-help-low-to-middle-income-families-save-morehttp://www.ippr.org/publications/55/1839/designing-a-life-course-savings-account-how-to-help-low-to-middle-income-families-save-more


23/28


0% 10%

20%

30%

40%

50%

60%

70%

I dont want my money tied up in savings accounts

Dont know

I dont see the need to save

Other

I nd saving too confusing

Not applicable

I dont have time to sort it out

I dont trust nancial providers

I dont think I need to save more

Not enough incentives to save

My outgoings prevent me from saving

I cant afford to save

Inoursurvey,respondentsweremostlikelytothinkaboutsavingwhentheyhadmoney

letover(36percent),whentheyhadsomethingspecifctheywantedtopurchase

(31percent)orwhentheyhadjustbeenpaid(29percent).Onein10respondentsdid

noteeltherewasaspecifctimetheywouldthinkaboutsavingordidnotthinkabout

savingatall,andonly12percentalreadyhadadirectdebitsetupthatmaderegular

paymentsintoasavingsaccount.Thisindicatesanapproachtosavingswherespecifc

eventsandpurchasesmotivatesavingsbehaviour.

Response

WhenIhavepaidoallomybillsandhavesomemoneyletover 36%

WhenIwanttobuysomethingspecifcally 31%

WhenIhavejustreceivedmyincomeeachweek/month 29%

WhenIhaveanoccasionsuchasabirthdayorChristmascomingup 28%

JustbeoreIgetmynextlotoincome 12%

Whenanemergencycomesup 12%

Ihaveadirectdebitsetuptogointomysavingsaccountonaregularbasis 12%

NotapplicableIamnotmorelikelytosaveatanyparticulartime/Idont

thinkaboutsaving

10%

Other 5%

Dontknow 4%

Thevastmajorityounemployedyoungpeopleeltthatlackoaordabilitywasthemain

reasonornotsaving,with80percentlistingthisasareasoncomparedwith63percent

oallemployedrespondents.Despitethis,incomeleveldidnotseemtoaectthereasons

putorwardornotsaving.

Figure5.6

Reasonsgivenornot

saving

Table5.2Responsestothe

questionWhenareyou

mostlikelytothinkabout

saving?


24/28


Thevastmajorityoyoungpeopledidnothavepensions,withonly13percentreporting

thattheyortheiremployerpaidintoapersonaloroccupationalpension.

Yes, I have an occupational or personal pension

No, I dont have an occupational or personal pension

Dont know

83%

13%4%

Dierenceswereoundbetweenagegroups,withthoseinthe2229groupbeingmore

likelytohaveapension.Nevertheless,ourinfveothisgroupdidnot.



Dont know

1617 1821 22290%

20%

40%

60%

80%

100%

90%

70%

50%

30%

10%

Theseresultsstronglycorrelatewithincome,withonly2percentothosewithanannual

incomeolessthan4,000havingapension,comparedwith8percenton4,000

7,000,15percenton7,00013,500and33percentothoseearning13,501

20,500.

6. PENSIONS

Figure6.1

Uptakeooccupational

orpersonalpensions

Figure6.2

Uptakeooccupational

orpersonalpensions,by

agegroup


25/28


Theresultsalsocorrelatewithrespondentsemploymentstatusorexample,22percent

oallworkersreportedhavingapension,comparedwithjust2percentostudentsand

4percentothoseunemployed.Thishighlightstheimportantroleemploymentplaysin

providingorhelpingtoundpensions.

0% 20% 40% 60% 80% 100%



Dont know

Working full-time

Working part-time

ALL WORKERS (NET)

Full-time student

Unemployed

Not working/Other

Arangeoreasonsweregivenornothavingapension.Themostcommonreason

(41percent)wasnothavingajoborbeinginajoborashortperiodotime.Almostone

infvereportedthattheywerenoteligibleorthattheiremployerdidnotoerapension,

whichsuggeststhatauto-enrolmentmaybeanimportantsteptowardsraisingthenumber

oyoungpeoplewithpensions.

Response

Donthaveajob/haventworkedorlongenough 41%

Cantaordto/dontearnenough/incometoolow 30%

Haventthoughtaboutit/haventgottenaroundtoit 25%

Noteligible/employerhasntordoesntoerapensionscheme 19%

Toomanydebts/bills/fnancialcommitments 14%

Other 8%

Dontknow 7%

Amrelyingonstatepension DontthinkIwilllivelongenoughtoneedone 4%

Amrelyingonfnancialsupportromamily 2%

Amrelyingonpartnerspension(includingex-partner) 1%

Otherreasonsputorwardwereearthatpensionswouldnotbetherewhenretirement

agewasreached,beingtooyoung,andpreerringothermethodsoinvestment.

Figure6.3

Uptakeooccupational

orpersonalpensions,by

employmentstatus

Table6.1

Reasonsgivenornot

havingapension


26/28


Thesurveyalsoaskedyoungpeoplewhatinuencedtheirspendingbehaviour.

Parentswerelistedasthemostlikelysourceoradvice,listedbyalmosttwo-thirdso

respondents.Theinternet(8percent),bankorbuildingsociety(7percent)andriends

(6percent)receivedarewerresponses.

0%

10%

20%

30%

40%

50%

60%

Mypare

nt(s)

Othe

rfamily

mem

bers

Frien

ds

Theb

ank/b

uildingso

ciety

Financi

alad

viser

Internet

Othe

r

Do

ntknow

Thishighlightsthestrongfnancialroleparentsplayinthelivesoyoungpeople.Some

dierencesbetweengroupscanbeidentifed.Forexample,the2229yearoldgroup

reliedarlessonparentaladvice(51percent),withtheinternetplayingaslightlylarger

role(11percent),likelyasaresultogreatergeneralindependenceatthisage.Reliance

onparentsoradvicewasalsorelatedtoincome,withlowerincomesreportinggreater

reliance(seefgure7.2below).

Respondentswereaskedtolistthewebsitestheyusedtosourceadviceonfnancialissuesrom.MoneySavingExpert 12wasbyarthemostcommonlynamedsite,withmany

otherssimplysayingGoogle.

Thevastmajorityorespondents(74percent)eltthattheirparentsorotheramily

membershadbeenveryorairlyinuentialintheirapproachtosavings,withonly

6percentsayingthattheyhadnotbeeninuentialatall(seefgure7.3below).

Whenaskedthesamequestionabouthowinuentialriendshadbeen,only19percent

eltthattheyhadbeenveryorairlyinuential,whichsuggeststhatpeergroupsdonot

haveassignifcantanimpactonthesavingsbehaviouroyoungpeople.

7. SAVINGSADVICEANDINFLUENCE

Figure7.1

Sourcesosavings

advice


27/28


My parent(s)Other family members

FriendsThe bank/building society

Financial adviserInternetOtherDont know

Unde

r4,00

0pe

ryea

r

4,000

7,

000pe

ryea

r

7,001

13

,500

per

yea

r

13,50

120

,500

per

year

0%

20%

40%

60%

80%

100%

Very inuential Fairly inuential Not that inuential

Not at all inuential Dont know

4%

30%

44%

16%

6%

WhenaskedabouttheimpactoTVorradioadvertisingonsavingsbehaviour,78percent

oyoungpeopleeltthatithadnoimpactatall.Only4percentreportedthatithadmade

adierencetotheirbehaviourand6percentthatithadledthemtotakeupaspecifc

savingsproductoraccount.Again,theimpactomediaonsavingsbehaviourisseemingly

verylimited,whichsuggeststhatattemptingtoincreasetheextenttowhichyoungpeople

savewouldbebetterdirectedthroughparentsratherthanadvertisingormedia

campaigns.Anotherapproachwouldbetoensurethatanysuchmessagesaredelivered

inamoreeectivewayinordertohaveagreaterimpactonsavingsbehaviour.

Figure7.2

Sourcesosavings

advice,byincome

Figure7.3

Inuenceoparentsand

amilyonsavings


28/28

Theindingsromourpollsuggestthatwhileyoungpeopleonlowincomeseelthey

havesomecontrolovertheirlivesandinances,theyarenotasagroupinancially

secure.Theyworryparticularlyabouttheirjobsecurityandmeetingcosts,andtherecent

recessionappearstohaveexacerbatedtheseworries.Thereisalsoevidencetosupport

theview,nowprevalentinpoliticalcircles,thatyoungpeopleeeltheywillbelesswell-

othantheirparentsgeneration.However,whenitcomestothespeciicquestionas

towhethertheywillownahome,youngpeopleappearianythingtohaveunrealistically

optimisticexpectations.

Incomeappearstomakelittledierencetoyoungpeoplesattitudes(rememberingthatallthepeoplesurveyedhadincomesatorbelowthenationalaverage).Whatdoesmake

abigdierenceisbeingemployedorunemployed.Unemployedyoungpeoplearear

morepessimisticabouttheirutures,bothinageneralsenseandinthespeciiccaseso

havingacareerandowningahome.

Oneothekeyindingsromthispollisthehugegapsbetweenthesavingsyoungpeople

onlowincomesactuallyhave,theirperceptionsowhattheyneedandtherealityo

whatisadequate.Althoughthemajorityoyoungpeoplesaytheyhavemoneysaved

orarainyday,justoneiniveyoungpeopleonlowincomeshasmorethan5,000in

thebank.Inact,almostoneinthree1829yearoldsearninglessthan21,000ayear

hasnosavingsorsavingsolessthan100.Thepollsuggeststhat,althoughtheyare

conidentthattheycouldmakeendsmeetbyusingtheirsavingsorcuttingbackontheir

spending,veryewyoungpeoplehavethereservestheywouldactuallyneeditheywere

maderedundant.Withyouthunemploymenthighandrising,youngpeoplearemore

vulnerablethantheyrealise.

Thepollingalsosuggeststhatyoungpeopleonlowincomesarenotpreparing

adequatelytomeetlonger-terminancialdemands,suchasraisingadepositorahouse

orsavingoroldage.Onceagain,thereisalargegapbetweenwhatyoungpeoplethink

isadequateandwhattheyactuallyshouldbesaving.Thisisparticularlyworryinginlight

otheincreasingneedorindividualstosave,withthegovernmentrollingbackpublic

expenditureandmortgagecompaniesrequiringlargerdepositstosecurehomeloans.

Thereoreitiscriticalthatwethinkonewandeectivewaystoinluenceyoungpeoples

attitudestowardssavingandtheirapproachtosecuringtheirinancialutures.Education

willhavetobeamajorpartothis,giventheevidentgapbetweenwhatpeoplethinkthey

needtosaveandwhattheyactuallyshouldbesaving,Theevidenceromthispolling

suggeststhatbyarthestrongestinluenceonyoungpeoplessavingsbehaviouristheir

parents,andthismightoerthebestroutetosuccess.

Advertisingappearstohavelittleinluenceonpeoplessavingsbehaviour.Noristhere

anyevidencetosuggesttheyarelikelytotaketheinitiativetoincreasetheirsavings.

Savingisaresidualactivitydoneattheendothemonthithereisanymoneylet,

whichotenthereisnot.Changingsavingsbehaviourwillthereorehavetoinvolve

changingthestatusosavingsothatitisgivengreaterpriority.Auto-enrolmentmaynot

beanoptionorormsosavingotherthanpensions,butotherwaysonudgingyoung

peopletosaveneedtobeexplored.

CONCLUDINGTHOUGHTS

young people and savings

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